(Adds Air Force, French defense ministry comments)
BRASILIA, Jan 5 (Reuters) - The Brazilian Air Force would prefer to buy its next-generation fighter jets from Sweden, putting it at odds with President Luiz Inacio Lula da Silva’s preference for French planes, a newspaper reported on Tuesday.
The deal, which could initially be worth more than $4 billion, has sparked fierce competition among aircraft manufacturers.
An Air Force report said Sweden’s Saab (SAABb.ST) had presented the best overall project among the three finalists, Folha de Sao Paulo newspaper reported on Tuesday.
The Brazilian government said last year that it was in the final stages of talks to acquire the Rafale.
Accused by critics of cutting short the bidding process, the government insisted no final decision had been made. Lula said he would have the final word and that his decision would be political and strategic.
Brazil has signed a strategic defense agreement with France worth billions of dollars, including the local assembly of helicopters and conventional and nuclear-powered submarines.
Brazil is seeking a generous technology transfer offer and local assembly as part of a contract to buy 36 jet fighters. The deal could eventually rise to more than 100 aircraft.
Saab’s Gripen NG jet had a lower purchase and maintenance cost and would allow for more technology to be transferred to Brazil, Folha cited the Air Force report as saying.
Unlike the Rafale, which is a finished product, the Gripen NG would be developed with Brazilian participation, the Air Force said according to Folha.
French officials sought to dismiss the report.
“It’s an unofficial, technical, internal report which we haven’t seen, so we’re not commenting on what appears to be a rumor,” a source at the French defense ministry said.
“The two aircraft are not comparable, it’s like mixing apples and oranges. They don’t have the same technical characteristics, not the same function,” the source added.
The Veja news magazine reported this week that Defense Minister Nelson Jobim told friends there might not be a decision on the deal before he steps down in April to run for public office in October general elections.
For more than a decade, Brazil has been studying how to replace its aging fleet of fighter jets.
The Air Force said it had completed the report but had not yet presented it to Jobim. The defense ministry was not immediately available to comment. (Reporting by Raymond Colitt; Additional reporting by Elizabeth Pineau in Paris; Editing by Tim Dobbyn)